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GOOGL - Google stock - a great trading stock

02-08-2015, 09:23 AM

What I look for in a trading stock is a company that is fundamentally sound, so that if I get stuck in a trade after buying in on a temporary dip that ends up going lower, that I can be confident that in time (usually just a few days or at worst weeks) the stock will come back.

GOOGL currently loves to go to 550. It currently trades between 500 and 550. Go long on the low side of that and you really can't go wrong.

Google is a such a strong company that even though they missed earnings on January 29, 2015Google earnings: $6.88 per share on revenue of $18.1B
the mere announcement by its CFO that they MIGHT start paying dividends IF they find a way to get their overseas cash into the country without paying taxes, sent the stock right back up minutes after they missed.

The story of the scene IS, that on a great stock like GOOGL, people look for an excuse to buy.

Comment

Google announced earnings yesterday and went through the roof. I traded it with heavy amounts of shares, profitably during the day, pre-earnings, and then - just to get in on it, I bought 100 shares of GOOGL at 559 just before the bell. I don't usually do "earnings play" - buying stock or options just before earnings, because these things are 50-50 and with tech stocks especially the stock will go up or down savagely. But a 100 shares wasn't a huge risk compared to my usual trading strategy.

Earnings for tech stocks are typically announced just AFTER the closing market bell at 4pm EST (some companies announce in the A.M. just before the opening bell). It is wild to watch what a stock does in the After Hours market (the AH) as earnings are announced. Sometimes, such as the last time Google announced earnings on January 29, 2015, the market doesn't like what it hears (in January 2015, Google missed earnings - that is, it reported numbers under the estimates), and the stock immediately starts tanking. That is what happened in January. But then minutes (perhaps seconds) later, the Google's CFO came on and made some B.S. announcement about how Google will be paying dividends if it can figure out how to get its overseas cash into this country without paying tax (one option is to just borrow against it - this is what AAPL is doing). An announcement like that, and GOOGL went from tanking to roaring straight up.

Sometimes at earnings the stock does the opposite, spikes straight up and then tanks. To protect myself in case something like that happened, and it went up fast, then dropped fast, I put in a sell for the 100 shares at 569 figuring, that's 10 points for a clean K, and also figuring GOOGL wouldn't even go up much more than that. This is just a tool one may utilize to add another level of protection to an earnings play - locking in a profit in case the stock spikes then rapidly drops. Of course, it limits potential profit, but also limits (slightly) potential downside.

Well, initially the figures came out and just as before, GOOGL missed (this time by -3.35%) and the stock started tanking, down many points. But then, seconds later, people liked the rest of what they heard, which was that PPC (pay per clicks) were up 25% and that revenue was up some 17%, and the stock TOOK OFF, blasting past my sell order of 569 in SECONDS (I heard the cha'ching chime my stock trading account makes as the order was filled), and roared on up past 580! Wow. The stock dropped almost as quickly to around 570 or so and then even lower to about 563 or so, and I started to think, well, cool, that's it, I may not have gotten the high for the AH, but I didn't get the low either.

Gradually though, the stock went back on up and closed in the 570s when the AH closed at 8pm EST. Amazing, but during that time the stock swung back and forth as much as 15 points if not more, and was a prime long and short candidate for trading. All in a day's work.

Comment

GOOGL had roared to 793 in December 2015, and again to 787 in April 2016, but is way down lately and today. Today particularly on comments from Citi that pay per click ad buying is down. GOOGL is now pushing 700. I think all that is happening today is that weak hands are being forced out and the market makers will sell back those same shares higher on down the road. I feel GOOGL is a buy at these levels.